Public Service Electric and Gas Co. has received approval from state regulators to expand its innovative solar loan program by $143 million to finance the installation of an additional 51 MW of solar energy systems on homes, businesses and municipal buildings throughout its electric service area.
Since the utility's initial Solar Loan Program was approved by the New Jersey Board of Public Utilities in April 2008, customers have applied for loans totaling $105 million that would result in 30 MW of installed solar capacity. The new initiative will result in a total of $248 million available for loans and 81 MW of solar power for New Jersey.
"There's no question that providing a source of stable, secure capital -- especially in our tough economy -- has helped boost the number of solar energy systems in New Jersey," said Ralph LaRossa, president and COO of PSE&G. "With today's BPU approval, this expanded program will support the development of another 51 megawatts of solar energy to help our state meet its aggressive renewable goals and reduce carbon emissions. We're pleased to do our part to make New Jersey a leader in solar energy installations, second only to California."
Filed with the New Jersey Board of Public Utilities (BPU) in March 2009, the Solar Loan II Program was reviewed by the BPU staff, the Department of the Public Advocate, solar developers and installers, and other utilities. These discussions led to a settlement agreement that resolved various issues, paving the way for today's approval by the BPU.
Here are the major components of the Solar Loan II Program as approved by the BPU:
- PSE&G's solar program will be open to all of its electric customers, including residential, commercial, industrial and municipal/governmental. The solar systems would be owned by the borrower of the loan, typically the developer or the host customer.
- The program will be available for two years and applications will be accepted on a first-come, first-served basis until 51 megawatts of projects have been developed. Projects in this program may not exceed 500 kilowatts (a typical residential system is 7 kilowatts).
- PSE&G would provide loans to developers or customers to cover about half of the cost of a solar installation project, depending on the projected output of the solar energy system and the cost of the system. The borrower would repay the principal, plus interest, over 10 years for residential customers and over 15 years for all other borrowers, a considerably longer investment timeframe than traditional lenders are willing to provide for solar installations.
- The remaining project cost would be funded by the owner of the solar system. The owner may also be eligible for a federal investment tax credit and rebates from the NJ Clean Energy Program.
- Borrowers of the loan would repay the loan with cash or with Solar Renewable Energy Certificates or SRECs, which are created every time the system generates solar electricity. It takes one megawatthour of solar generation to create one SREC, which has value in the marketplace. An SREC is a New Jersey tradable product that represents the clean energy benefits of electricity generated from a solar energy system. Under the Solar Loan II program, the SRECs are guaranteed to be valued at no less than an agreed price as approved today by the BPU.
- Initially, the SREC floor price for residential systems is $450, for non-residential systems up to 150 kw the price is $410, and for systems larger than 150 kw up to 500 kw it is $380. The floor prices offered for SRECs for new loan applications will be reduced by about 3-6 percent every 6 months.
- PSE&G's electric customers will pay for the cost of the solar program through the RGGI Recovery Charge (RRC), which is included in the delivery part of their monthly bill. PSE&G will sell the SRECs it receives for loan repayment in an auction, and credit the proceeds from the sale to customers through the SPRC, which will offset a portion of the program costs. The average residential customer who uses 722 kilowatthours in a summer month and 6,960 kilowatthours annually will pay about 36 cents more per year than they do now.
In addition to the loan program, PSE&G has begun to implement its Solar 4 All program, investing $515 million in 80 megawatts of solar projects that will help double the state's solar capacity and create additional green jobs. The utility is installing solar panels on 200,000 utility poles and street lights in about 300 communities. PSE&G also will develop solar gardens and roof-top installations on facilities it owns and also at third-party sites.